Tax Benefits for Individuals and Extent of Their Use in Estonia During 2007-2009

Discussions on Estonian Economic Policy, January 2011

16 Pages Posted: 7 Jul 2011 Last revised: 4 Feb 2012

See all articles by Velda Buldas

Velda Buldas

affiliation not provided to SSRN

Priit Sander

University of Tartu - Faculty of Economics and Business Administration

Mark Kantšukov

University of Tartu - Faculty of Economics and Business Administration

Date Written: June 1, 2011

Abstract

In this paper an overview of tax benefits granted by Estonian legal acts is given, and extent of tax benefits use by resident natural persons using the data from databases of Estonian Tax and Customs Board (ETCB) is analyzed. Also the possibility of tax benefits classification is considered and to whom and on which purposes stated tax benefits are addressed is analyzed. Research based on three years data shows that in Estonia tax benefits for individuals are widely used. On average uncollected amounts of tax due to tax benefits approximately equal 9% of the state budget revenues. Large amount of tax benefits is not a negative indicator per se but they aid distributed incomes to reach people who really need those benefits. In opposite case tax benefits are not reasoned but they rather create additional administrative workload. Talking about Estonian tax system roughly half of tax benefits is addresses to people who belong to low income stratum, at the same time remarkable proportion of benefits may be directed to middle-class and wealthy people.

Keywords: tax benefits, tax exemptions, tax system, Estonia

JEL Classification: D14, H2

Suggested Citation

Buldas, Velda and Sander, Priit and Kantšukov, Mark, Tax Benefits for Individuals and Extent of Their Use in Estonia During 2007-2009 (June 1, 2011). Discussions on Estonian Economic Policy, January 2011, Available at SSRN: https://ssrn.com/abstract=1880008 or http://dx.doi.org/10.2139/ssrn.1880008

Velda Buldas (Contact Author)

affiliation not provided to SSRN ( email )

Priit Sander

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Rd. 4-A214
Tartu 51009, 51009
Estonia

Mark Kantšukov

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Rd. 4-A308
Tartu 51009, 51009
Estonia

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